Petrol and diesel price review is launched by OFT

The UK petrol and diesel sector is being put under the microscope by the fair trading watchdog amid rising prices at the pumps.

The Office of Fair Trading (OFT) will spend six weeks gathering evidence about whether competition is being curtailed.

The watchdog will also consider whether falling costs of crude oil are reflected in prices paid by motorists.

It will publish its findings in January.

The OFT said that the UK retail road fuels sector was estimated to be worth about £32bn.

Petrol prices rose by 38% between June 2007 and June this year, and diesel prices went up by 43% over the same period.

In June, the government announced it would postpone its 3p-a-litre rise in fuel duty from August until January.

'Widespread concern'

The OFT said the review, which is not a full-scale investigation by the watchdog at this stage, would study whether the action of supermarkets and oil companies made it difficult for independent retailers to compete in the market.

The review would also look into whether there was a lack of competition at the pumps in rural areas.

"We are keenly aware of continuing widespread concern about the pump price of petrol and diesel and we have heard a number of different claims about how the market is operating," said Claire Hart, of the OFT.

"We have therefore decided to take a broad based look at this sector, to provide an opportunity for people to share their concerns and evidence with us.

"This will help us determine whether claims about competition problems are well-founded and whether any further action is warranted."

Now at last we should get a definitive answer on how the market worksStephen Glaister, RAC Foundation director

A significant chunk of the price paid by consumers on petrol is tax, which will not be covered by the review.

'Overdue'

The Department for Transport has previously suggested that industry should come up with a voluntary code of conduct to ensure wholesale price falls were passed on within a fortnight to the motorist.

A spokesman for the department said: "We have had discussions with suppliers and retailers before and during the summer. Now the OFT has launched its own investigation it is right that we wait and see what that turns up.

"Many motorists are concerned about fuel prices and that when crude oil prices fall, this is not seen at the pump as quickly as consumers would like. We look forward with interest to the findings of the study."

Stephen Glaister, director of motorists' group, the RAC Foundation, said: "We have always argued for pricing transparency and this review promises to provide it. Now at last we should get a definitive answer on how the market works.

"We also welcome scrutiny of what the rapid decline in the number of petrol stations has meant for fuel supply and price. In 1990, there were some 18,000 forecourts. Now there are fewer than 9,000."

Meanwhile Edmund King, the president of the AA motoring organisation welcomed the OFT's decision but said the move was "overdue".

The latest figures from Experian Catalist show that the average cost of a litre of unleaded was 138.99 pence on Tuesday. The average price of a litre of diesel was 143.52 pence.

Earlier this year, the Retail Motor Industry Federation raised concerns with the OFT about the ability of independent traders to compete in the market.

Similar concerns about prices at the pumps have led to investigations from regulators in Germany, Spain and Australia.

Meanwhile, motorists in the UK have been warned to check online MOT certificates when buying a car, rather than looking at a printed out version.

The Trading Standards Institute said that the paper documents could easily be altered by fraudulent sellers.